House of Representatives Committees

Chapter 2 Proposed integrated fit-out of new leased premises for the
Australian Taxation Office at the site known as 913 Whitehorse Road, Box Hill,
Victoria

2.1The Australian Taxation Office (ATO) currently leases office space at
990 Whitehorse Road, Box Hill, Melbourne, Victoria. The lease is ending and the
accommodation does not meet the National Australian Built Environment Rating
Scheme (NABERS) rating of 4.5 stars required for new Commonwealth leases over
2,000 square meters.

2.2The proposal is an integrated fit-out of a new building. The building
will be designed to meet a 5 star NABERS rating and a 5 star Green Building
Council of Australia (GBCA) Green Star rating. It will provide the ATO with
approximately 19,100 square metres of office space. The fit-out will be
designed to meet at least a 4.5 star NABERS rating.[1]

2.3The current lease expires on 30 June 2014. It is proposed that the new
office accommodation will be occupied from 2 April 2014.

2.4The estimated cost of the project is $36 million.

2.5The proposal was referred to the Committee on 9 May 2012.

Conduct of the inquiry

2.6The inquiry was advertised in The Australian on 30 May 2012.

2.7The Committee received a submission from the ATO. The ATO also provided
a supplementary submission and two confidential supplementary submissions, one
of which detailed the project costs. A list of submissions can be found at
Appendix A.

2.8The Committee undertook a site inspection, public hearing and an
in-camera hearing on the project costs on 2 July 2012 in Melbourne.

2.9The transcript of the public hearing as well as the submissions to the
inquiry are available on the Committee’s website.[2]
Plans for the proposed works are detailed in Submission 1: Australian Taxation
Office.

Need for the works

2.10The existing office accommodation was constructed for and has been
occupied by the ATO since 1992.[3] It is ageing and would
require extensive upgrades and a new fit-out to meet the ATO’s current building
specifications.[4]

2.11The existing office accommodation has a NABERS rating of 3.5 stars,
below the minimum Commonwealth requirement.[5] It also has a fit-out
density ratio above the Commonwealth Property Management Guidelines maximum of
16 m2 per occupied workpoint.[6]

2.12The ATO has committed to an ongoing business presence in east suburban
Melbourne, but its agents have been ‘unsuccessful in discussions with the
current building owner regarding building upgrades’ if the ATO were to continue
leasing the existing building.[7]

2.13The ATO stated that current building owner is unwilling to upgrade the
building to the required standards:

I can tell you that, for the current building, the building
owner was unwilling to do a whole tranche of upgrades to bring the base building
into line with what we need. That is the first issue … [The building owner]
came back saying, basically, ‘The building is what the building is.’ And this
building is problematic. We have untold problems in the running of the
air-conditioning and the lifts and some of the base building considerations.[8]

2.14The ATO added that upgrading and refurbishing the existing building
would also involve high operating costs in the short term.[9]

2.15As the current building cannot be upgraded to the required standards,
the ATO needs to lease alternative office accommodation. The ATO has
refurbished buildings before, at Chermside in Queensland and Moonee Ponds in
Melbourne.[10] However, the ATO stated
that a new building was the preferred option in this instance:

The ATO approached the market seeking long-term accommodation
solutions that provide an appropriate environment to help us meet a broad range
of targets established under the Commonwealth Property Management Framework and
associated policies such as the EEGO [Energy Efficiency in Government
Operations] energy efficient target.[11]

2.16The ATO considered various proposals through an evaluation process:

[The proposals] were deemed to be unable to either meet the
base building requirements or deliver a value-for-money outcome. Submissions we
received varied from refurbishment of the existing building to brand-new
building developments.[12]

2.17The preferred option was selected by the ATO as the organisation retains
a presence in Box Hill and ‘provides a value for money solution with a significantly
improved focus on environmental sustainability and productivity improvements.’[13]

2.18The Committee finds that there is a need for the proposed works.

Scope of the works

2.19The proposal is to fit-out approximately 19,100 m2 of office
accommodation, over approximately 13 floors.[14]

2.20The works include:

nintegration of
services into the base building works, including electrical, mechanical,
communications, security, fire and hydraulic services

nsupplementation of
the base building fire services where required as a result of the fit-out works
to ensure compliance with relevant codes, including additional exit lights,
fire detection and sprinkler supplementation as necessary, and highly sensitive
fire detection equipment in the computer rooms

narchitectural
designed office accommodation including construction of reception areas, a
security alarm system, an electronic control system, general office fit-out and
open plan work areas

nstandardised office
sizes of 32 m2 and 16 m2

ngeneric workstations

nthe vast majority of
offices and meeting rooms to be constructed in the central cores so as not to
limit natural light from external windows

2.21The building design and fit-out will provide the ATO with considerable
flexibility to meet its ever-changing accommodation requirements. This will be
achieved through:

nwork points that can
easily and quickly be reconfigured without disturbing productivity

nmaximising the use of
open plan areas

nensuring the enclosed
areas are capable of being altered easily to allow for future change, such as
the utilisation of modular meeting room design so that two small meeting rooms
will also satisfy the requirements of one large meeting room with minimal
additional works

nbuilding services
that are located to allow for repositioning of walls, work point layouts and
accommodation changes in technology

na robust security system
that protects ATO information, people, other assets and operations.[16]

2.22Subject to Parliamentary approval, the fit-out is scheduled to commence
in May 2013, and be completed by 1 April 2014.[17]

2.23The Committee finds that the proposed scope of works is suitable to meet
the need.

Cost of the works

2.24The total estimated cost for this project is $36 million, excluding GST.
The Committee received a confidential supplementary submission detailing the
project costs and held an in-camera hearing with the ATO on those costs.

2.25The Committee is satisfied that the costings for the project provided to
it have been adequately assessed by the proponent agency.

Committee comment

2.26The Committee is pleased that the ATO remains committed to a presence in
the eastern suburbs of Melbourne. The Committee is also pleased that the
proposed location is very close to the current building, meaning minimal
disruption for ATO Box Hill staff.

2.27The Committee did not identify any issues of particular concern with the
proposal and is satisfied that the project has merit in terms of need, scope
and cost.

2.28Having regard to its role and responsibilities contained in the Public
Works Committee Act 1969, the Committee is of the view that this project
signifies value for money for the Commonwealth and constitutes a project which
is fit for purpose, having regard to the established need.

Recommendation 1

The Committee recommends that the House of Representatives
resolve, pursuant to Section 18(7) of the Public Works Committee Act 1969,
that it is expedient to carry out the following proposed work: Proposed
integrated fit-out of new leased premises for the Australian Taxation Office
at the site known as 913 Whitehorse Road, Box Hill, Victoria.